Automated External Defibrillators ("AEDs") may be common across schools and government buildings, but emergency oxygen is surprisingly less common even though it's widely used by emergency medical services to provide initial stabilization and reduce or prevent organ and brain damage. The problem is that oxygen is much more difficult to store and deliver, while oxygen tanks pose a potential safety risk and must be replaced with some regularity in order to remain effective on site.
OxySure Systems Inc. (OTCQB: OXYS) has solved these problems with its revolutionary OxySure Model 615, which combines two inert powders to produce medically pure oxygen via a unique device that almost anyone can operate. The technology is the only product on the market that can be safely pre-positioned in public and private venues for emergency administration of oxygen by the layperson, without the need for any training.
Core Markets & Strategy
In late 2008, the OxySure Model 615 was introduced into the K-12 education market, where it has been used to address a wide variety of emergencies, ranging from asthma attacks to sudden cardiac arrest. After seeing some early success in these markets, management expanded OxySure's focus into other commercial markets, like colleges, churches, manufacturing facilities and municipal buildings, where the technology is still gaining traction.
OxySure has positioned its OxySure Model 615 as a natural complement and companion product to Automated External Defibrillators ("AEDs"). Over the long-term, it aims to have the technology become a standard issue item for public and private settings, just like a fire extinguisher. With the global AED installed base at approximately 3 million units, the AED companion market alone for OxySure approximates over $1 billion.
Increasing Market Penetration
OxySure's channel strategy involves leveraging distribution partnerships to enhance its market penetration, while increasing efforts to partner with distributors of AEDs, safety products and medical devices. For instance, the company signed a non-exclusive distributor agreement with Aventric Technologies - an education-focused distributor of branded AEDs - on June 18, 2013 to sell its full portfolio of products alongside its existing AED offerings.
In addition to accumulating distributors, the company plans to pursue a legislative agenda for state and federal mandates, medical reimbursement for at risk markets, and insurance underwriting benefits and discounts for product users. These efforts should help speed up adoption of the technology by making it required (like a fire extinguisher) or cheaper for many of its core markets by introducing government and private reimbursements.
New Ways to Increase Revenues
OxySure plans to diversify its product offerings through the addition of complementary or additive products and solutions that enhance their core product's usability, feasibility, appeal or application. For example, the company announced a new double wall mounted cabinet to house a combination AED/OxySure system on July 17, 2013. The product enables customers to house and display an AED of their choosing and the OxySure Model 615 in a single spot.
In addition to these efforts aimed at easing adoption, management plans to explore new products incorporating its "oxygen from powder" technology, such as aviation, mining, sports, and recreational end markets. These markets represent additional multi-million dollar markets that can be addressed without significant additional capital expenditures, since the same core "oxygen from powder" technology would be used with only the form factor changing.
Looking into the Future
OxySure's management team has multiple strategies at its fingertips to reach its true market potential outlined in the Management's Discussion and Analysis ("MD&A") section of its regulatory filings. These efforts could culminate in both increased market penetration in its core markets and new revenue opportunities from new products, new markets, and enhanced reimbursements from private and public agencies throughout the U.S.
Taglich Brothers analyst Juan Noble recently issued a $2.10 per share price targeted based on the success of these strategies - a 187% premium to its August 5, 2013 price. But, the company's real potential will be when the technology appears in Kimberly-Clark Corporation's (NYSE: KMB) manufacturing facilities, Corinthian Colleges Inc.'s (NASDAQ: COCO) school campuses, or in each one of KB Home's (NYSE: KBH) residential houses.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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